Mobile games coming of age?

On the heels of EA's giant acquisition of Jamdat Mobile, the mobile-games industry is holding its breath and seeking huge growth.

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
4 min read
SAN JOSE, Calif.--Electronic Arts' purchase of mobile-games publisher Jamdat last December, its biggest-ever acquisition, served notice to a game industry that has been slow to adapt to the massive proliferation of mobile phones around the world.

As EA goes through the laborious process of integrating its $684 million purchase, (click here for PDF), one thing is becoming increasingly clear: Even in mobile gaming, it's going to get a lot harder for the little guys to compete with the giant publishing houses like EA.

At least that's the word from the EA executives at GDC Mobile, the two-day mobile-games event being held here this week in conjunction with the Game Developers Conference.

And they make a strong argument: They have a graphics-rendering engine that allows them to build games across different platforms. They have deep pockets to spend the money needed to create increasingly complex games for everything from the Xbox 360 to the smallest mobile device. And they have the marketing clout small publishing houses can only envy.

"I believe you're going to see a picture 18 months from now," said Robert Tercek, founding chairman of GDC Mobile, "where the mobile-gaming market consists of major console game publishers who have all acquired a mobile-game shop, and online game publishers, who have extended their online games to mobile, and a dwindling number of standalone, pure-play mobile-game publishers."

Of course, the trick will be making all of the pieces come together, and there are certainly no guarantees when big companies buy up small ones--whether it's big game companies like EA or big software companies like Oracle doing the buying.

EA execs, to no one's surprise, think they're getting close to the formula that's going to let them play in their traditional console and PC business, as well as in the growing mobile-game business. And mobile gaming, they seem to think, is where the next big opportunities--and perhaps the most interesting fights--are going to be for game publishers.

Though mobile games, which are already a $2 billion business, have for several years presented a huge growth upside, the rapid deployment of phones with high-quality screens and cameras and the ability to play MP3 audio means publishers can aim games at devices that already rival circa-1995 desktop computers and that will soon reach the processing power of the first PlayStation, Tercek said.

The growth potential in a mobile market in which 800 million phones are sold annually can't be overstated, he argued.

EA's enviable position
To EA, meanwhile, purchasing Jamdat was an expedient--if expensive--way to gain dominance in the mobile-game publishing arena, said Mitch Lasky, senior vice president of EA Mobile and formerly CEO of Jamdat.

He said that the acquisition was at least five times larger, in dollars, than any previous acquisition in EA's history.

Prior to the purchase, EA had already been trying to make a go of mobile games and wanted to be the market's top dog, but it had been unable to overtake Jamdat.

With Jamdat in the fold, EA finds itself in the enviable position of owning a top producer of mobile titles that now has access to EA's deep pockets and well-established technology.

For example, Lasky said, Jamdat can leverage the fact that EA uses a common rendering engine across its many franchises, something that Jamdat could never have had on its own. Further, Jamdat now can access EA's impressive library of intellectual property as it works on future titles.

With the ability to make mobile titles like "Madden NFL," "The Sims," "FIFA Soccer" and many other platinum hits, EA is putting more pressure than ever on its competitors.

"It's going to put a lot of pressure on companies that haven't yet achieved profitability," Lasky said. "Before, (competitors) were having trouble chasing Jamdat, and now they're going to have to chase Jamdat and EA. I would love to say it's going to be puppies and kittens and roses for everybody, but it ain't."

But for Tercek, as an evangelist of mobile games, EA's newfound strength in the space is nothing but exciting.

"It's a huge statement" of EA's intentions in mobile games," said Tercek. "They were buying a successful company, buying market share, protecting their flank and buying expertise they did not have internally."

And for small mobile-game design shops, the only path to survival is going to be to create brand new games that cannot be easily copied.

In any case, with tens and even hundreds of millions of mobile-phone owners who have not warmed to playing games on their handsets, Tercek acknowledges that publishers like EA and its competitors have a serious dilemma on their hands: which direction to go.

On the one hand, companies like EA can keep doing what they're doing and continue marketing currently successful mobile games like "Jamdat Bowling."

On the other, they can work to create all-new titles.

But Tercek doesn't think publishers can do both, and as such, this is a crucial time when it comes to choosing which route to take.

And that's what several thousand people are here for this week: to attend one of dozens of panel sessions about mobile-game development and to help augur the industry's next moves.

Still, to Tercek, the small guys in the industry had better move quickly in the creation of their category killers. Otherwise, they're going to find themselves too far behind EA to catch up.

"With Vivendi Universal opening their own mobile-games group," said Tercek, "and every major Japanese console and arcade game publisher coming into mobile, it is abundantly clear that mobile is the next big growth opportunity for the games industry."